Ark. revenues up despite slip in sales taxes

ANDREW DeMILLO, Associated Press

Tuesday, 2 Oct 2012 | 1:52 PM ETThe Associated Press

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LITTLE ROCK, Ark. -- Arkansas' finance office said Tuesday that the state's revenues are ahead of last year's figures and are beating expectations, but officials said they're worried about sales tax collections sliding for the third straight month.

The Arkansas Department of Finance and Administration said the state's net available revenues in September totaled $494.7 million, which is $31.9 million above last year and $29.9 million above forecast. The state's revenues for the fiscal year to date, which began July 1, total $1.2 billion and are ahead of forecast by $42.1 million.

The monthly figures were boosted primarily by individual income tax collections, which were $36.7 million above last year's figures and $29.8 million above forecast. Individual income tax collections for the month totaled $275.5 million.

The gains offset another dip in sales tax collections, which totaled $177.8 million for the month. The collections were $1.2 million below last year and $7.2 million below forecast. It marked the third straight month that sales taxes came in lower than expected, the department said.

"That is an area of concern that we seem to have less spending, taxable spending, going on," said Richard Weiss, the department's director. "Who knows all the reasons for it? Clearly gas prices have been up more than they were same time last year and all that. Utility bills have been higher since we've had such a hot summer. That's the area of the most concern."

Revenue officials say they can't say how much the sales tax collections were affected by the annual back-to-school sales tax holiday in August. There is a one-month lag in sales tax collection data, so the September figures are the first that would include the holiday.

Lawmakers last year approved the sales tax holiday. During that weekend, clothing items priced at less than $100 and clothing accessories or equipment less than $50 are exempt from state and local sales taxes. School supplies are also exempt that weekend. State finance officials have estimated the holiday costs the state about $2.1 million a year.

Gov. Mike Beebe said he believed the latest report showed the state was on forecast. He said the boost in individual income tax withholding was partly because of more payroll days during the reporting period.

"The good news is that withholding is up generally, even with the anomaly, which means more people are working," Beebe said. "But the fact that sales tax is flat or below forecast suggests that people still aren't spending money because they're concerned about the future."